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How do fund fees affect a small investment?
Why fees matter more to small investors and how to reduce their impact.
Published 13 August 2026 3 min read
The short answer
Fees reduce your net return. For small investments, fixed fees or high percentage charges can be a large proportion of your capital. Choose low-cost funds and platforms with reasonable trading charges to reduce the drag on returns.
Types of fees
Look at platform dealing fees, ongoing fund management charges (Ongoing Charge Figure or OCF) and any custody fees. Percentage fees have more impact over time through compounding.
Practical impact
High fees can materially reduce the growth of small balances. Low-cost, diversified funds are often preferable for small investors looking for efficient exposure.
What this means in practice
- 1Compare the OCF/TER of funds and the platform fees for your expected investment size.
- 2Prefer funds with low fees if you are investing small amounts regularly.
- 3Watch for flat account fees which disproportionately affect small portfolios.